Howse Williams
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Anyone, including foreigners, can own and occupy real estate, including shares in property owning companies. There is generally no nationality restriction on the ownership and occupation of real estate. However, under the "Hong Kong Property for Hong Kong People" scheme implemented by the government, additional land lease conditions are imposed to selected residential sites, restricting the sale of the residential units to only Hong Kong permanent residents. Such restriction shall expire after a 30-year period commencing from the date of the relevant land grants.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
There is no legal restriction on lending for the purchase of real estate by foreign companies. Lenders may however impose additional restrictions and eligibility criteria on foreign borrowers according to the lenders' commercial considerations and compliance policies.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Legal costs, agency fee (if any) and miscellaneous charges will be incurred for the preparation, execution, stamping and registration of documents relating to the sale and purchase of real estate.
Ad valorem stamp duty ("AVD") at the scale ranging from HKD$100 up to 4.25% of the consideration or value of the property (whichever is higher) is chargeable on the sale and purchase of real estate. With effect from 28 February 2024, the same AVD scale is applicable to purchasers of all nationalities, both corporate and individual purchasers, and properties of all user (both residential and non-residential).
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Owners of properties are liable to pay rates and government rent. Rates are one of Hong Kong's indirect taxes levied on properties while government rent is a rent payable by the lessee of the government lease in return for the right to hold and occupy the land. The payable amounts of rates and government rent are calculated based on the rateable value of the property. The burden of payment may be passed to the tenants or occupiers by the relevant lease/tenancy agreement.
Further, property owners who have derived rental income from letting properties are liable for property tax, which is computed by taking into account the gross annual rental income. However, any person that sublets premises is considered to be carrying on a business, and the corresponding rental income is chargeable to profits tax rather than property tax.
Except AVD, there are no other taxes applicable to acquisition and transfer of real estate.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
There are no tax breaks or other incentives exclusively available to foreigners to buy real estate in Hong Kong.
However, there is no capital gains tax in Hong Kong. The gains from disposal of the property are generally not subject to tax. Nonetheless, where gains from the sale and purchase of real estate form part of the normal trading activities of the entity, profits tax may apply.
It is important to note that after the additional stamp duty previously payable by foreigners has been cancelled under a new tax regime, purchasers of all nationalities are subject to the same tax treatment when buying real estate.
How is the ownership of Real Estate evidenced in your jurisdiction?
The title to real estate is not directly registered in Hong Kong. Instead, Hong Kong adopts a deeds registration system which provides a record of registration of instruments affecting the property, including title documents (e.g. assignment and sale and purchase agreement). While the registration system enables an interest registered first to gain priority over the subsequently registered interest, it does not provide conclusive evidence of title to the property. Therefore, in each and every case, it is necessary to also check all historical title documents concerning the property in order to verify ownership of the real estate.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
Instruments registered on the registration system are accessible by the public and copies of the registered documents can be obtained from the Land Registry upon payment of fees. Identity of owner(s) of real estate can be revealed by a search conducted on the system. However, owner(s) can conceal their identities by holding structures which may involve trust arrangements, layers of corporate vehicles or off-shore entities.